Market Talk
– The dollar was up on Friday morning in Asia, even as downbeat U.S. labour data and a stubbornly dovish U.S. Federal Reserve prompted investors to unwind some bets on the greenback and drove it towards its worst week of the year.
– U.S. Fed Chair Jerome Powell’s fresh comments defending the central bank’s dovish stance during an International Monetary Fund event on Thursday and weaker US labour data continues to weigh on the US dollar
– The USD/CNH reached a low of 6.5500 after China released a better-than-expected March consumer and producer price indexes data earlier in the day showing the Chinese economy growing with low inflation.
– The euro and yen are poised for their largest weekly percentage gains in five months, with the euro up 1.4% and the yen up 1.3% against the dollar this week. Sterling fell to 1.3700 amid growing concerns about Britain’s reliance on AstraZeneca.
– Gold was down on Friday morning in Asia but is still hovering close to a more-than-one-month peak reached during the previous session. A weak unemployment data had sent Gold to a high of $1758.45 overnight.
Chart Focus AUD/USD
Key Points
1. Sell AUD/USD recommendation.
2. Sell AUD/USD at 0.7605. Stop at 0.7645 and target at 0.7535.
3. A difference in bond yields between the US and Australia is supporting the US dollar.
4. Price remains in a downtrend and Stochastic is also hinting of a bearish price movement.
Fundamental Comments
1. Despite the Fed’s dovish comments, US Treasury yields remain at an elevated level, supporting the US dollar.
2. The different in bond yields between the US and Australia is in favour of the US dollar.
Technical Comments
1. Price remains below a downtrend line and is likely to move lower.
2. A bearish crossover in Stochastic is hinting of a bearish price trend ahead
Key Levels
| Support | 0.7595 | 0.7560 | 0.7530 |
| Resistance | 0.7635 | 0.7660 | 0.7695 |
Technical Overview
USD/JPY – Price has declined to a low of 109.00 on Thursday night and we have seen a price recovery to 109.40 but this could be a corrective rally as MACD remains bearish and 20EMA is also hinting of a strong bearish price trend. If price is capped by the 20EMA at $109.70, we could see another decline to 108.80 in the next few days ahead.
| Support | 109.25 | 108.95 | 108.40 |
| Resistance | 109.65 | 109.95 | 110.40 |
EUR/USD – Price formed an Inverse Head and Shoulder chart pattern and has now moved beyond the chart pattern’s price target at 1.1860 to a high of 1.1927. We think the upside is limited. While the trend as provided by MACD and 20EMA remain bullish, MACD and Stochastic has started to warn with divergences of a possible price high in the formation. A move below 1.1855 would confirm a Double Top chart pattern and a reversal to 1.1790.
| Support | 1.1880 | 1.1835 | 1.1795 |
| Resistance | 1.1910 | 1.1945 | 1.1985 |
GBP/USD – Price has declined to near the previous low at 1.3670. A break of this support is likely to lead price lower to the Fibonacci 127% price projection target at 1.3490. MACD remains bearish and is hinting of a bearish price trend but Stochastic is in the oversold extreme. 20EMA is bearish and is hinting of a bearish price trend ahead. Watch 1.3660 for clue to the continuation of this decline.
| Support | 1.3660 | 1.3620 | 1.3585 |
| Resistance | 1.3715 | 1.3750 | 1.3790 |
XAU/USD – We had a buy order at $1728.25 on Tuesday, which was filled when price dipped to a low of $1727.65. On Thursday, price reached our profit target of $1754. We are out of this position with a $25.75 price gain. Stochastic is turning down but MACD remains bullish. However, price has also moved below the 20EMA, hinting of a bearish price trend. Stochastic and MACD are also warning with divergences.
| Support | 1742.80 | 1734.10 | 1721.25 |
| Resistance | 1758.45 | 1768.20 | 1775.50 |
XAG/USD – Price broke above a downtrend channel at $25.20 and moved to a high of $25.61 overnight. We think the topside is limited as Stochastic is in the overbought extreme and MACD has divergence warning of a possible price high. Price is currently supported at the 20EMA at $25.20 and if this support breaks, we are likely to see a move back to $24.60.
| Support | 25.15 | 24.80 | 24.55 |
| Resistance | 25.40 | 25.60 | 26.00 |